Jim Douglass’ unusually successful “JFK and the Unspeakable” gently makes the case that the Kennedy assassination was a watershed event in the evolution of the United States into an imperialist power, and others have made a similar point.[1] The assassination paved the way for a full-scale escalation in Vietnam, the desire for which, if it was not the single cause of Kennedy’s murder, certainly played a role, since the Vietnam fiasco was an immediate and undeniable result. Indeed, anyone studying the beginning stages of the military commitment in Vietnam cannot help but come away with the impression that Vietnam was at least a compensation, a way to keep the military junta ever-waiting in the wings occupied after it had removed JFK.[2]

While everyday Americans may still have the sense that the American Dream, usually identified with the Eisenhower years of peace and prosperity, traumatically ended with the JFK assassination — the years following resembling a sad, slow unraveling of decline marked by more and more inexplicable military adventures overseas — the true extent of the damage of the Vietnam adventure to the basic make-up of the United States, and thus the extent of the catastrophe that was the Kennedy coup d’état, is still unknown.

This is where Michael Hudson’s “Super Imperialism” comes in as a useful, even necessary supplement to JFK assassination research. Called “the most important work on imperialism since Lenin”, Hudson’s “Super Imperialism” charts the development of the U.S. into the great nation of finance imperialism, a mode of domination that operates by controlling the world primarilythrough debt and only secondarily by military means. What makes “Super Imperialism” of special interest to students of the JFK assassination is how the Vietnam conflict served as the specific trigger for this transformation. While a book like Douglass’ describes the moral and political dimensions of Kennedy’s killing and the sad legacy of imperialist events which followed, Hudson’s book details exactly how, economically speaking, the U.S. came to dominate as an imperialist power through a total restructuring of the world economy as direct result of the Vietnam conflict.

A CENTURY IN OUTLINE

Hudson’s book is in large part a chronicle of economic diplomacy. In addition to presenting extensive economic data, the book draws heavily on pieces published in sources such as The Economist and Foreign Affairs, the publication of the CFR. His explication of the events leading to the U.S. become the world’s super-imperialist power is for this reason that much more staggering; his patient presentation of the historical logic behind each step of the process, along with quotes from famous diplomats, published memoirs, and internal government documents makes his conclusions seem self-evident. Yet while lauded in government circles after the book’s first printing, the book’s conclusions are not currently taught in U.S. universities and seem wholly missing from mainstream discourse.

Here are the steps by which the U.S. came to dominate the world through “super-imperialism”:

1. During the First World War, the U.S. adopted a position thataccording to Hudson was unprecedented in modern history: instead of simply granting resources to its wartime allies, it made loans to its allies that had to be repaid. The U.S. accomplished this in part by insisting that it was not an “ally” but rather an “associate” to the European powers with which it was aligned. These loans had to be repaid with interest. This established in a powerful way the newly modern phenomenon of inter-governmental debt. Historically, government debt up to that time had been held mainly by private investors; whereas after World War I, government debt was mainly held by other countries — above all, the United States.

2. After the cessation of hostilities, allied powers like the U.K. were astonished to discover that the U.S. was serious about its loans being repaid with interest. With their economies in ruins, the allied powers had no way to raise their money to repay the U.S. other than to extract reparations more forcefully from Germany, which the U.S. ironically released from much of its responsibility to pay after realizing that it couldn’t. The Americans’ stance after the war was thus in effect harder on its own allies than on the Germans, but the result was nevertheless the same: according to Hudson, Germany was “bled white”. (p 49 2nd edition).

3. America’s insistence that the U.K. and other allies pay immediately created the basic set-up for the Great Depression. America’s export markets collapsed, especially in agriculture, because Europe’s reconstruction (and market for imports) was stymied by America’s insistence on repayment. In turn, European powers that could only repay their debts by increasing exports to America were thwarted by American protectionist policies. The massive burden of these intergovernmental debts with their huge levels of interest was borne only barely during the twenties thanks to private capital flowing into Germany from the U.S., which then was transferred to the former Allies and then back to the U.S. via debt repayments. But private American capital stopped flowing into Germany at the end of the nineteen-twenties when the stock market boom made domestic investment more desirable. This caused the circular flow of payments to break down and the whole system to collapse. Currency devaluation began in the UK, which sparked tariff wars across the globe. Then national economies collapsed. The brutal pressure placed upon Germany to repay, it has been often argued, made the climate ripe there for Nazism.

4. After the Second World War, the U.S. realized it could not make the same mistakes it made following the First World War. It made different arrangements with a variety of countries, and even disbursed some payments that were not just loans, including the Marshall Plan. Bretton Woods, along with the creation of the IMF and World Bank, established the U.S. as the world’s leading creditor nation. As Hudson says of the new U.S. approach on p. 121:

This time, however, Europe’s repayments on these borrowings were managed in such a way that they did not exhaust international liquidity. Loan repayments to the World Bank and IMF were recycled to replenish these organizations’ lendable resources, not simply poured into the U.S. economy to be extinguished as capital available to foreign economies.

At the heart of American generosity here, of course, was the desire to avoid another depression owing to a collapse of production at home. Foreign markets were needed urgently so that American production could continue apace.

5. Money loaned to European countries by the U.S. was able to help finance European reconstruction. This was achieved significantly by European exports to Latin America. European exports to Latin America were paid for with gold, meaning that by the early 1960s, Latin American gold reserves were almost drained. But also, it meant that American reserves would be at their peak since the gold passed to Europe would be again passed on to the U.S. in the course of loan repayment. This cemented the perception of Latin American countries in the twentieth century as being only raw materials exporters: reconstructing Europe was done at the cost of Latin American development. This arrangement in effect would be extended to the entire non-Communist world, with third-world countries kept in perpetual bondage since more equitable, bi-lateral terms for those countries would have meant disrupting the equilibrium established by the new de facto dollar bloc of the U.S. Treasury, the IMF, and the World Bank.

6. Despite slowly growing deficits at the end of the Eisenhower era, the U.S. started the 1960s with a healthy economy and a considerable stockpile of gold. U.S. inflation was beginning to cause some concern at the international level. But this, roughly, was the state of the national economy during Kennedy’s first term. But with the assassination of Kennedy and the initiation of the Vietnam conflict, the U.S. economic situation started to change. According to Hudson — in what is the most important chapter of the book for JFK researchers (Chapter 11: Financing America’s Wars With Other Nations’ Resources, 1964-1968, p. 254):

Part of the problem was simply that the United States did not want to pay for its war in Vietnam. The Korean War had been financed essentially by the Federal Reserve’s monetizing the federal deficit, an effort that transferred the war’s cost onto some future generation, or more accurately from future taxpayers to future bondholders. But in 1964, as the United States once again committed itself to military involvement, the likelihood of it settling its payments deficit in the foreseeable future declined. Foreign central banks would have to bear at least the foreign exchange costs of the war. Toward this end U.S. financial strategists sought to restructure the International Monetary Fund, regardless of Europe’s wishes. If the U.S. payments deficit were to persist indefinitely, the IMF would have to be transformed to accommodate it. This posed with utmost clarity the question of the degree to which Europe could be induced to absorb the costs of an aggressive American war over which Europe had no control and in whose outcome it had no real interest.

The turmoil caused by the U.S. forcing a restructuring of the IMF — ostensibly to increase world liquidity, but really to finance the Vietnam conflict — set the stage for a showdown at the end of the nineteen-sixties. France effectively withdrew from the Gold Pool. Italy called for an end to the financing of America’s deficits. The Gold Pool, which had allowed a fixed link between the dollar and gold, collapsed. Because of expenditures for Vietnam, the U.S. slipped deeply into debtor status after being the world’s creditor nation for two decades. By the end of the sixties, most of the U.S. gold supply that had been amassed prior to 1960 thanks to European repayments had flowed back to Europe during the deficit years. U.S. gold reserves because of the deficit were now dangerously low.

Hudson writes:

On March 31, 1968, millions of Americans heard Lyndon Johnson announce over television that he would not run again for the presidency, and that he would not substantially escalate the Vietnam War despite the Tet offensive. Unperceived by the public at large, the point finally had been reached at which depletion of U.S. gold holdings abruptly altered the country’s military policy. As one expert noted: “The European financiers are forcing peace on us. For the first time in American history, our European creditors have forced the resignation of an American president.”

7. It was left to the Nixon administration (of course) to transform this situation of near-helplessness and economic defeat into the basic condition for a new financial super-imperialism. In 1968, the American outlook was bleak. OPEC started to demand “an immediate increase in royalties and taxes from U.S. and British petroleum companies in proportion to the declines of the dollar and sterling relative to gold” (p 260). Foreign governments were increasingly calling in American debt in the form of gold rather than dollars. What was the U.S. to do?

As Hudson puts it on page 263:

Three courses open to the U.S. Government upon the collapse of the Gold Pool in 1968: immediately to pull out of the war in Southeast Asia and cut back overseas and domestic military expenditures to allow the dollar to firm again on world markets; to continue the war, paying for its foreign-exchange costs with further losses of gold; or to induce Europe and other payments-surplus areas to continue to accumulate dollars and dollar equivalents exchangeable only for other dollar equivalents not convertible into gold.

As we know from History, the U.S. went with the third choice. The United States managed to compel Europe, Japan, and Canada not to cash in their dollars for gold anymore, but rather to reinvest their central bank dollar holdings in U.S. Treasury securities. This effectively recycled the funds thrown off by the U.S. deficit. But these countries had little choice. Europe’s official dollar balances were frozen. The balances could not be cashed in for American gold because of their very size — $12.5 billion by the end of 1968 — a sum that exceeded total U.S. gold holdings. Most of these dollars therefore were invested in illiquid U.S. Treasury securities. A Dollar Bloc financed by blocked dollar deposits had therefore been created.

The consequence, unclear to those countries at the time, was as Hudson writes on page 265:

It became possible for a single nation, the United States, to export its inflation by settling its payments deficit with paper instead of with gold. There was no limit to ability of the United States to print paper or create new credit, despite the fact that there was a visible limit to its gold stock.

In other words, once the foreign central banks fell for the ruse of accepting (paper) treasury securities instead of gold, they were forever on the hook for more paper. Once the U.S. dropped the gold standard, U.S. debt assumed the role of “dark matter” that structured the financial universe. A world currency in the hands of a debtor nation meant that its debt would become the world’s structuring force. Whereas before countries like France were once openly agitated at effectively financing the Vietnam conflict for the U.S., now every military adventure undertaken by the U.S. is paid for ultimately by foreign governments who have very little choice — since a U.S. collapse would take down their own economies as well.

CONCLUSION

The outline presented above errs by trying to be brief and glosses over some important points. The reader is encouraged to read “Super Imperialism” for him- or herself. The above does however provide the gist of Hudson’s remarkable demonstration.

To see the Vietnam conflict as the calamity it was — and therefore see the 1963 coup d’état as the calamity it was — one must look beyond the obvious moral and cultural aspects and see the deep economic aspects as well. Because of the U.S. military’s paranoid insistence on taking the initiative, any initiative at all, against the Soviet Union; and because of the military-industrial-congressional complex’s breathtaking desire for profits and other windfalls stemming from military conflict, the U.S. became a debtor nation on the brink of disaster within the short timespan of the Johnson administration. It was left to Richard Nixon to dupe foreign governments and central banks into accepting paper promises to pay, which to the U.S. government’s delight meant that the debts could never truly be called in without the whole system falling into collapse. This lesson — this accidental checkmate of foreign powers vis-à-vis debt — the American political class learned and re-learned again and again in the coming years, taking advantage of the fact more and more forcefully over the following decades, finally leading to the absurd situation we have now.

There are many implications to Hudson’s super-imperialism thesis. For one, critiques by the so-called Austrian school of economics and such figures as Ron Paul apparently miss an important part of the overall picture: economic realities alone do not dictate where and when U.S. debt finally becomes a catastrophic disaster. Political realities do. If economic rules alone determined the outcome, the U.S. would probably have defaulted long ago. Instead, a complicated political calculus keeps all the important actors in check and participating. This is also why policymakers in their hubris feel comfortable with more borrowing: they feel confident they can control the political aspect (particularly since they have the U.S. military) and so the economic will follow suit.[3]

Next, a book like Naomi Klein’s “The Shock Doctrine” finds a proper broader context in Hudson’s “Super Imperialism”. Klein’s book begins with the parallel between hideous “shock therapy” experiments of the fifties and the rise of the neo-liberal Chicago School of Economics led by Milton Friedman. Klein’s book chronicles how these anti-democratic “economic” ideas wrecked one country after another, championing instability and mass murder so that corporate profits, usually American, could be realized. Of course, while the book is right to point out that the greed of these companies and institutions, usually helped by the U.S. government, was the direct cause of these crimes — a greed justified or rationalized by Friedman’s “shock doctrine” — the book fails to give a proper systemic account of just how or why this Chicago School thinking fit so perfectly into the surrounding historical milieu. Hudson’s book provides that system-wide account. Corporations exploiting other countries and American foreign policy being tailored to condemn third-world countries into having only raw material export economies (classic imperialism) — makes even more sense when it is considered how the U.S. government itself shifted from paying its costs with money from its own citizens to a permanent indebtedness imposed on the rest of the world. Running greater and greater deficits that need never be repaid means that the world’s wealth gets continually transferred to the U.S. for its own enjoyment and consumption. Once it is understood that the U.S. has been unilaterally confiscating the world’s wealth for decades, effectively parasitizing the world economy, it is much less a surprise that a multinational corporation would on a smaller scale take a similar view towards a given country, move in with American governmental blessing and confiscate its natural resources before moving onto the next.

Third, Hudson’s “Super Imperialism” provides the basis for a proper leftist or progressive critique of the debt problem. Rather than simply being a failing of moral rectitude that solemn-faced conservatives or market-fundamentalist libertarians would seek to correct, U.S. indebtedness has in fact been the chief tool of American supremacy for decades against the rest of the world. Without the free and easy money from countries forced to spend their U.S. dollars on IOUs for more dollars at a later date, there would be no sprawling sub-civilization that is the U.S. Military and all of the infinitely bifurcating arms of the National Security State. Overhauling the U.S.’s current balance-of-payments scheme would necessarily mean restructuring the world economy away from the hegemonic entrenchment of U.S. imperial strategy.

Finally, there is that perennial question of students of the assassination: What if? The question is raised forcefully by Hudson’s book. We know, for example, that Vietnam and subsequent “wars” were human calamities on their face, being unnecessary wars with untold loss of life. We have every reason to believe that the transformation of the U.S. into a high-tech police state since 9/11 was probably only a continuation of a process that began with the assertion of the right-wing national security mindset which rationalized a coup against a sitting president. But what if Kennedy hadn’t been murdered? Or what if the conspirators had actually been brought to justice, a nightmarish ordeal for the country but still necessary? Would even the very structure of the world economy now be different? Hudson’s analysis suggests that the great economic subterfuge that has allowed American world domination only came into being after the U.S. wantonly ran up deficits to pay for the Vietnam conflict. Yet if Jim Douglass, Fletcher Prouty, and so many others are right — Vietnam as we know it would never have happened under Kennedy.

So looking back now: How many countries have been denied the right to thrive as result of those shots fired in Dallas? How many millions of lives lost because of the American imperial misadventures that followed?

Endnotes

1. Fletcher Prouty was probably the first to raise the issue of NSAM 263 and 273, viz. how NSAM 273 directly contradicted the earlier 263 and the suspicious circumstances surrounding the drafting of NSAM 273. Prouty also drew attention to the way NSAM 263 had been obscured in the release of the so-called Pentagon Papers, otherwise thought to be the leak of pure inside information.

The speculative documentary film “Virtual JFK” also homed in on Kennedy’s appropriately presidential level of caution when it came to actions that might provoke war with the Soviets — and the intense ire this brought about from his military advisors.

2. As Oliver Stone has LBJ say in his film “JFK”: “Just get me elected, I’ll give you the damn war.” Given the reasonable speculation by some that because of the assassination’s anti-Castro angle (e.g. Oswald being sheepdipped as first a defector, then a pro-Castro Cuban sympathizer; also the anti-Castro Cuban presence among the suspected players in the tragedy) the intended goal of the assassination was the U.S. invasion of Cuba, it seems possible that Vietnam emerged as a historical diversion which kept the U.S. military distracted and satisfied while luckily averting World War III.

3. Much has been made in the JFK assassination community of the possible financial elite/Federal Reserve angle to the Kennedy coup. Jim Fetzer frequently tells the story, for example, of holding in his hands one of the currency notes printed at Kennedy’s direction by the Treasury Department (and not the Federal Reserve) bearing a red seal. While there may or may not have been a Federal Reserve/financial elite angle to the assassination, there can be no doubt that Kennedy was deemed unworthy of the mantle of Commander-in-Chief by the foreign policy establishment and the right-wing military leadership. Kennedy’s removal precipitated the ascendancy of today’s multi-national financial elite (as opposed to merely regional, e.g. northeastern) thanks to the massive pooling of the world’s wealth in the United States over the following decades.